Albania’s banking system reports stunning profits in 2017 due to decline in bad loans

The reduction of non-performing loans has resulted in an increase of Albania’s banking system profits at record levels.

According to data from the Bank of Albania, for the nine-month the net profit of the banking system amounted to ALL 16.9 billion.

This result is two and a half times higher what it was in the same period last year.

The high increase in profits is owed mainly to the significant reduction of non-performing loans.

According to the Bank of Albania, the ratio of non-performing loans decreased to 14.8%, the lowest level since the beginning of 2011.

The decline in non-performing loans is illustrated by a drastic reduction in provisions expense.

Statistics show that for the 9-month period, the banking system spent only ALL 1.6 billion for the non-performing loans fund, while a year earlier this item was ALL 13.6 billion.

Income from interests and those from other activities decreased slightly during the 9-month period, while other expenses were at levels close to the previous year.

It is the decline in provisions that has made almost the entire difference in the growth of the profits of the banking system.

Increasing profits makes the banking system healthier and most likely it will have a positive effect on lending to the public.

However, it should be noted that high profits remain concentrated in a few large banks, while other banks still show a modest profitability.

SCAN

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